Jamie L. LaReau and Eric D. Lawrence
As if the U.S. auto industry’s transition to electric vehicles hasn’t been rocky enough, President-elect Donald Trump’s victory over Democratic rival Kamala Harris adds uncertainty to the Detroit Three’s push toward an all-electric future, industry watchers said.
Still, some say the domestic automakers will see some wins from Trump taking over. For example, he is expected to ease some of the environmental regulations that have pressured the Detroit Three to make a fast push toward EV adoption.
But it’s a mixed bag because Trump has also set his sights on scaling back or eliminating EV initiatives. Auto analysts said it would be difficult for him to completely gut President Joe Biden’s Inflation Reduction Act initiatives, but through executive orders, Trump could defund or limit some of the EV subsidies included there. Many parts of the IRA, such as expanding EV charger infrastructure, were in place to help the Detroit Three encourage EV adoption.
Add to that the impact of Trump’s promise to impose bigger tariffs to imported goods. Sure, that keeps cheap Chinese vehicles off U.S. shores. But it also could affect parts and U.S.-brand cars built elsewhere, such as in Mexico, and could lead to higher new-vehicle prices — just when sky-high sticker prices were finally cooling off and keeping demand for new vehicles stable, experts said Wednesday.
Then there is the union. While UAW members were divided in their support for Trump and Harris, President Shawn Fain endorsed Harris and vocalized his disdain for Trump. Trump is likely to be unfriendly in return, which some say plays to Fain’s own combative style.
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All in all, expert forecasters, such as Cox Automotive, predict U.S. auto sales will hold up and finish the year up 2% with 15.7 million new vehicle sales this year compared with 2023, regardless of the upcoming U.S. leadership change.
“Presidents come and go, but the auto industry motors on,” Mark Schirmer, director of Industry Insights & Corporate Communications at Cox Automotive, said in a Wednesday morning newsletter.
Autos ‘one of the biggest beneficiaries’ of the Trump win
Some analysts say the Trump win is a boon for the Detroit auto industry. Higher tariffs — which are the taxes put on goods that cross national borders — would keep the Chinese from flooding the U.S. market with cheaper EVs than U.S. automakers offer.
Trump has promised to scale back or eliminate many of the Environmental Protection Agency’s emissions standards as well as incentives to promote production and adoption of EVs. Some experts said less regulation would ease carmakers’ costs.
“I think autos are among the biggest beneficiaries — not sure why more people aren’t talking about it,” Michael Ward, managing director of research for Freedom Capital Markets, told the Detroit Free Press of Trump’s victory. “Five things I looked at: Lower fuel is always good news for the autos, less inflation from the lower fuel prices leading to lower interest rates … autos (are) among the most capital-intensive industries and lower rates benefit the consumer.”
Ward said he also expects personal and business taxes to go down, giving consumers more purchasing power.
Bank of America Securities analyst John Murphy also said in a Wednesday investor note cited by CNBC that General Motors and Ford will be “the main beneficiaries from the Trump administration.” He cited the Biden-Harris “environmental regime” as pressuring the core business of the automakers to “decarbonize by the end of the decade while shifting quickly to an EV portfolio.”
The impact of tariffs for buyers and carmakers
Many of the industry experts also see some uncertainty under a Trump presidency.
“It’s very mixed in terms of the implications in this 313 area code,” Dan Ives, managing director and senior equity analyst at Wedbush Securities, told the Detroit Free Press Wednesday.
Under Trump, Ives agreed there will be less pressure for GM, Ford and Stellantis — which makes Chrysler, Dodge, Jeep, Ram and Fiat brands — to continue pursuing a speedy EV transition. But while tariffs will keep the Chinese out, tariffs also complicate the supply chain of auto parts imported to the states.
Put another way: “Tariffs will lead to more jobs for U.S. workers at component suppliers and higher costs for car buyers, who already suffer from sticker shock,” said Erik Gordon, business professor at the University of Michigan’s Ross School of Business. “People will keep cars longer, and that will be good for the replacement parts and service industries.”
Others doubt that Trump will put large tariffs on every imported vehicle. Morningstar Autos Analyst David Whiston told the Free Press that large tariffs on all imports would violate the USMCA agreement for Canadian and Mexican production. That would severely hurt American automakers, especially GM and Stellantis, who make some of their pickups in Mexico, he said. Ford also makes cars in Mexico.
“I don’t think Trump would do tariffs (that) will hurt the Detroit Three, at least not severely,” Whiston said in an email Wednesday. “Things like the steel tariffs that took low billion-dollar profit amounts from earnings years back are probably a bigger tariff threat than one on all vehicle exports to the U.S.”
He said China tariffs for now won’t make a big impact because few Chinese-made vehicles are imported currently.
Joe McCabe, CEO of AutoForecast Solutions, told the Free Press that tariffs are not a long-term solution to building a domestic economy and manufacturing base, noting that tariffs become a tax on the consumer and ultimately prices go up. He pointed to an argument that the 60-year old “Chicken Tax” — a 25% tariff on imported light trucks imposed over European tariffs on American chicken — helped create Detroit automakers’ truck dominance. But in doing so, it gave domestic-built trucks a monopoly, making them too expensive without competition.
“With that said, (the tariff strategy) is currently the only hammer in the U.S. toolbox until we find a more balanced solution,” McCabe said. “The goal is to buy time for our domestic market to improve efficiencies and competitive priced products.”
Trump impact on EV adoption
One of the first things Trump will likely do is revoke the $7,500 EV tax credit offered to buyers of EVs, Wedbush’s Ives said. That would not only be “a gut punch to the EV initiatives” of the Detroit Three, but it would give EV-sales leader Tesla an advantage. Tesla, led by Trump ally Elon Musk, does not need the tax credit as much as GM and Ford does, Ives said, because Tesla has the sales volume to lower prices and other cost advantages.
But Whiston said axing the EV tax credits would be tough because they are statute as part of the Inflation Reduction Act. Also, if the credits went away or got much harder to obtain, it hurts every EV maker, Whiston said.
“Though it hurts Tesla the least because they have a deep cost advantage in EV production versus legacy automakers,” Whiston said.
Trump has promised Musk a quasi-Cabinet position. Musk’s access to the White House does not bode well for the Detroit carmakers, Ives said.
But there is a catch. Trump has said he won’t allow California to require that all vehicles in the state go electric in a decade. With Trump’s pal Musk running the world’s most valuable EV company, Trump’s anti-EV stance might soften.
“A rising tide raises all boats. So to the extent that Elon is able to hamper the vilification of EVs by a potential Trump administration, all the better,” James Chen, former head of policy for Rivian and Tesla, told Reuters.
Wayne State University business professor Marick Masters said that ultimately Trump will want to grow jobs in manufacturing generally and motor vehicle and parts specifically.
“Since June of this year, US manufacturing has lost nearly 150,000 jobs and the auto industry (vehicles and parts) has lost over 30,000 jobs,” Masters said. “His policies will focus on lowering the cost of doing business and pushing China to engage in more ‘fair’ trade policies.”
U-M’s Gordon believes that Trump will warm up to EVs, as long as they are U.S.-made.
“But he is unlikely to push them via regulation,” Gordon said.
EV industry responds
Trump has made it clear that he wants to reduce or cut vehicle electrification mandates, saying consumers should drive the market. Masters predicts that a major shift will occur in policy, but it will give automakers more flexibility in transitioning to EVs.
The problem is that carmakers have invested billions to transition to EVs and they can’t just “pivot on a dime” to change course, McCabe said.
“A balanced portfolio approach needs to be the direction,” McCabe said. “Growth in electrification (not just battery electric vehicles) with less punitive actions and longer carbon footprint targets need to be considered. Extended-range options in pickup trucks, for example, help a consumer determine if a plug is not a disruptor in their lives. Trump has always had California in his sights, but it will not be a stroke of a pen to change their ZEV mandates.”
Steven Greenhouse, a longtime labor writer at The New York Times and currently a senior fellow at The Century Foundation, noted that Trump “seemingly moderated his antipathy to EVs as he sidled up to Musk” during the campaign, but that he might still try to pull EV subsidies, “and that would certainly mess up Detroit’s automakers’ plans — and probably hurt many autoworkers.”
Electric Drive Transportation Association President Genevieve Cullen said in a statement Wednesday that the group will continue to work with both parties to “secure the economic and environmental opportunities presented by electric drive technologies.”
Cullen said more than 130 EV models are currently available with nearly 6 million sold and 362 companies investing $320 billion in the U.S. EV market. Last year, the electrified vehicle segment — which includes hybrids, plug-in hybrids, all-electric EVs and fuel cell vehicles — supported 373,605 jobs in America, she said. Cullen noted another 850,000 anciliary jobs supported the EV industry.
“Electrification is the future of transportation, and our nation cannot cede the opportunity to lead in this critical market,” Cullen said.
Federal regulations likely to be affected
One other area of the auto industry where a second Trump administration could have a big impact is in safety regulations.
Michael Brooks, executive director of the nonprofit Center for Auto Safety, which advocates for improved vehicle safety and fuel efficiency, said he expects the auto industry will be pleased with what is likely on the way at the National Highway Traffic Safety Administration.
“If the first Trump presidency is any indication, we will see NHTSA’s now-active rulemaking division come to a screeching halt. I think we only saw two relatively minor final rules make it across the finish line from 2017-2020 in Trump’s first term, whereas the Biden NHTSA has been far more active in rulemaking efforts,” Brooks said, noting that that dozens of rules are in the review process. “Most of those rulemaking efforts will be hitting wet concrete under the Trump administration, including important rules on impaired driving tech, pedestrian protection, autonomous vehicles and advanced driver assistance systems. Also likely would be attempted rollbacks of fuel economy standards and electric vehicle policy.”
NHTSA’s work related to vehicle recalls is also likely to be affected. Brooks noted that under the previous Trump administration, the agency’s defect investigations were near “all-time lows,” which made it difficult to uncover defects and influence safety recalls. That stands in contrast to the agency’s current “far more active” work to pursue defect investigations and see them through to timely conclusions, he said.
“If Trump follows through on making Elon Musk a leader in the administration, we could also see NHTSA enforcement investigations influenced, particularly those involving Tesla, which is currently facing an investigation into the capabilities of its “Full Self-Driving” tech,” Brooks said of Musk.
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The UAW and a ‘new reality of American politics’
U-M’s Gordon said that while UAW members have had mixed support for Harris and Trump, “Shawn Fain is going to be happy as a clam because Trump is a useful target for (Fain’s) retro ‘us versus them’ name-calling style. Fain does better with a good enemy than he does with a friend.”
In a statement to the media Wednesday, Fain said regardless of who is president, UAW members continue to face “unchecked corporate greed destroying” lives by shipping jobs overseas to boost shareholder profits.
“We’ve said all along that no matter who is in the White House, our fight remains the same. The fight to fix our broken trade laws like the USMCA continues,” Fain said. “The fight for good union jobs and U.S. leadership in the emerging battery industry continues. The fight for a secure retirement for everyone in this country continues. The fight for a living wage, affordable health care and time for our families continues. It’s time for Washington, D.C., to put up or shut up, no matter the party, no matter the candidate.”
Fain said the key issue facing autoworkers is if the government will “stand with the working class, or keep doing the bidding of the billionaires.”
Wayne State’s Masters said this election represents a continuing realignment of the political parties, eroding some of the union’s past political prowess.
“The Republican Party has the chance to expand its base as the party of the working class across gender and race, literally turning the parties upside from their positions since the New Deal,” Masters said, “In this transition, organized labor has much less of a political voice than it has in the past, due to declining ranks across numerous industries.”
Masters believes that Trump will appeal directly to unionized and nonunion employees, going over the heads of union leaders, calling it “the new reality of American politics.”
Greenhouse, the former labor writer, said it’s not clear what a second Trump term will mean for the UAW, but it’s not likely to be good.
“Considering how Trump has often talked of retribution against his critics, he may pressure some prosecutors to launch investigations of the UAW and Fain,” he said. “Trump will no doubt appoint a National Labor Relations Board that is more hostile, less friendly toward unions than Biden’s NLRB, and that could make it harder for the UAW’s ambitious plans to unionize more auto plants.”
For Bob King, what Trump’s win will mean for the UAW and labor does prompt some worries, in large part because of those who are believed to be advising Trump. King, who served as UAW president from 2010-2014, pointed to Project 2025, the expansive conservative presidential transition playbook pushed by the Heritage Foundation.
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“I think every leader and activist in the labor movement is concerned about attacks on workers’ rights to organize, workers’ rights to collective bargaining, keeping jobs in this country,” he said, noting that in regard to Trump’s advisers, “I think everybody in the labor movement is very, very concerned about that.”
Those plans “all sound pretty negative about unions and pretty opposed to unions,” he said.
The Detroit 3 react
In a statement, Ford spokeswoman Robyn Jackson said the company congratulates President-elect Trump and the newly elected officials across the government.
Ford will remain “steadfast in our strategy to provide customers choice of gas, electric and hybrid vehicles,” the statement said. “We look forward to working with the new administration and Congress on policies that strengthen the U.S. automotive industry, which supports 9.7 million American jobs and drives more than $1 trillion into the economy each year.”
At GM, spokeswoman Liz Winter said in a statement, “We congratulate and look forward to working with the president-elect, Congress, and all elected officials to ensure that the U.S. continues to lead the world in technology and innovation, to the benefit of American workers and consumers alike.”
Stellantis spokeswoman Shawn Morgan provided a statement, noting that “Stellantis congratulates former President Donald J. Trump on being elected the 47th President of the United States. We look forward to working with President-elect Trump and the new Congress on policies that support a strong and competitive manufacturing base in the U.S.”
Stellantis CEO Carlos Tavares has previously indicated the company would be prepared for whoever wins the election, but has acknowledged that the winner would likely affect the speed of a transition toward electrification.
“We are not assuming that the destination is going to change, we think electrification will go on,” Tavares said late last year.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.
